Correlation Between Bank of America and Invesco Growth
Can any of the company-specific risk be diversified away by investing in both Bank of America and Invesco Growth at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bank of America and Invesco Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Invesco Growth Allocation, you can compare the effects of market volatilities on Bank of America and Invesco Growth and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bank of America with a short position of Invesco Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Invesco Growth.
Diversification Opportunities for Bank of America and Invesco Growth
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Invesco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Invesco Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Growth Allocation and Bank of America is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bank of America are associated (or correlated) with Invesco Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Growth Allocation has no effect on the direction of Bank of America i.e., Bank of America and Invesco Growth go up and down completely randomly.
Pair Corralation between Bank of America and Invesco Growth
Considering the 90-day investment horizon Bank of America is expected to generate 2.36 times more return on investment than Invesco Growth. However, Bank of America is 2.36 times more volatile than Invesco Growth Allocation. It trades about 0.11 of its potential returns per unit of risk. Invesco Growth Allocation is currently generating about 0.07 per unit of risk. If you would invest 3,703 in Bank of America on September 3, 2024 and sell it today you would earn a total of 1,048 from holding Bank of America or generate 28.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Invesco Growth Allocation
Performance |
| Timeline |
| Bank of America |
| Invesco Growth Allocation |
Bank of America and Invesco Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Invesco Growth
The main advantage of trading using opposite Bank of America and Invesco Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Invesco Growth can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Invesco Growth will offset losses from the drop in Invesco Growth's long position.| Bank of America vs. Partner Communications | Bank of America vs. Merck Company | Bank of America vs. Western Midstream Partners | Bank of America vs. Edgewise Therapeutics |
| Invesco Growth vs. Ashmore Emerging Markets | Invesco Growth vs. Wilmington Funds | Invesco Growth vs. Lord Abbett Emerging | Invesco Growth vs. Matson Money Equity |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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